Drug Waste = Money

By G. John Verhovshek, MA, CPC

Certain circumstances call for practices to discard unused portions of drugs. For instance, Botox® (onabotulinumtoxin A) currently has a shelf life of only four hours when reconstituted. If the entire vial isn’t used within that time, the only option is to discard the remaining supply.

This waste is not necessarily money down the (proverbial) drain, however. You may report drug waste for those drugs the billing entity paid for and provides. For example, you wouldn’t bill waste for provider-administered drugs the patient purchased from a pharmacy. Nor would you report waste for drugs supplied by a facility.

When appropriate then, report drug waste in addition to the drug itself and its administration. Report the drug using the appropriate HCPCS Level II supply code and the correct number of units in box 24D of the CMS-1500 form. Wasted units should be entered as a second line item. Provider documentation must verify the exact dosage of the drug injected, and the exact amount and reason for any waste.

Local contractors may require you to use modifier JW Drug amount discarded/not administered to any patient to identify an unused drug from single-use vials or single-use packages that are appropriately discarded. Check with your individual payer whether modifier JW is required.

Resource: National Medicare guidelines for reporting drug waste may be found in the Medicare Claims Processing Manual, chapter 17, section 40 (www.cms.hhs.gov/manuals/downloads/clm104c17.pdf).

Report Waste Only for Last Patient’s Use

The Centers for Medicare & Medicaid Services (CMS) encourages “physicians, hospitals and other providers to schedule patients in such a way that they can use drugs or biologicals most efficiently, in a clinically appropriate manner.” If more than a single patient receives drug from a single-use vial, include any waste on the claim for the final patient who received the drug. For example:

The provider schedules three Medicare patients to receive onabotulinumtoxin A (J0585 Injection, onabotulinumtoxin A, 1 unit) on the same day. From a 100-unit vial, the provider administers 30 units to each of the three patients. The remaining 10 units cannot be used within the drug’s shelf life, and must be discarded.

The correct way to report this would be to bill HCPCS Level II J0585 x 30 for the first patient and J0585 x 30 for the second patient. On the final claim, however, bill 40 units as two line items—J0585 x 30 for the drug used and J0585-JW x 10 for the waste.

Factor in Math, I-9, and Exceptions

In a second example, a patient with metastatic colorectal cancer presents for palliative chemotherapy. The provider administers 340 mg/m2 irinotecan intravenously in 500 mL D5W (5 percent dextrose in water) over 89 minutes. The oncologist opens nine 40 mg vials (360 mg), thereby wasting 20 mg.

In this example, you would report J9206 Irinotecan, 20 mg x 17 (340 mg / 20 mg dose = 17 units) and J9206-JW x 1 on a second line item to account for the waste. You would also report the chemotherapy administration using 96413 Chemotherapy administration, intravenous infusion technique; up to 1 hour, single or initial substance/drug, with a diagnosis of 154.0 Malignant neoplasm of rectum, rectosigmoid junction, and anus; rectosigmoid junction.

Note: Medicare will reimburse only for drugs supplied in “single-use vials.” Although more than one patient may be treated from a single-use vial (as in the first example), the drug must be used up within a short time. A “multiuse vial” treats a greater number of patients and has a longer shelf-life. Medicare will not cover discarded drugs from multiuse vials.

There is one exception to this rule: Self-administered erythropoietin stimulating agents (ESAs) for Method I home dialysis patients, as described in the Medicare Benefits Policy Manual, chapter 11, section 90 (www.cms.gov/manuals/Downloads/bp102c11.pdf).

The Medicare Claims Processing Manual, chapter 17, section 40.1 also specifies, “The renal facility must bill the program using the modifier JW for the amount of ESAs appropriately discarded if the home dialysis patient must discard a portion of the ESA supply due to expiration of a vial, because of interruption in the patient’s plan of care, or unused ESAs on hand after a patient’s death.”

OIG Targets Oxaliplatin Waste Reporting

Drug waste is a big-money issue, and as much as providers may stand to lose by not claiming discarded drugs correctly, so too does Medicare have to lose by paying for over-reported supplies.

As evidence, the Office of Inspector General (OIG) recently announced it would be auditing claims for oxaliplatin, a chemotherapy drug used to treat colorectal cancer, billed incorrectly during 2004 and 2005. The OIG’s decision followed an investigation into billing practices at two hospitals: Providence Saint Joseph Medical Center in Burbank, Calif. and Good Samaritan Regional Medical Center in Corvallis, Ore.

Resource: You can obtain more information on the oxaliplatin audit from the OIG website: www.oig.hhs.gov/.

For a single oxaliplatin claim in 2005, Providence Saint Joseph received an overpayment of approximately $13,055. The hospital billed 200 service units for 200 milligrams of oxaliplatin administered. At that time, however, Medicare required hospitals to bill one service unit for each 5 milligrams of oxaliplatin provided using HCPCS Level II code C9205 Injection, oxaliplatin, per 5 mg. Forty service units (not 200) would have been appropriate to report 200 milligrams of oxaliplatin (200 milligrams/5 milligrams per unit = 40 units).

The OIG also found Good Samaritan did not bill Medicare in accordance with Medicare requirements for six oxaliplatin outpatient claims, for which it received overpayments totaling approximately $167,139.

In both cases, the facilities misapplied the units to report oxaliplatin. For this, there may be some explanation: The required HCPCS Level II code for oxaliplatin for facility use (C9205) was inadvertently omitted from the HCPCS Level II manual in 2004, but the practitioner’s code (J9263 Injection oxaliplatin, 0.5 mg) was present. OIG findings revealed, “some providers were billing claims using code C9205, but applying the unit logic of code J9263, which would result in claims billed with excessive units of service.”

Here’s the bottom line: You must pay careful attention to the dosage specified in HCPCS Level II code descriptors—not just for oxaliplatin, but for all drugs. Simple errors in calculating billable units can quickly add up to big dollar mistakes.

Oxaliplatin Billing Since 2006

Effective Jan. 1, 2006, CMS instructed hospitals to bill Medicare for oxaliplatin using J9263, rather than C9205. By this instruction, the dosage for oxaliplatin—and units billing—was changed.

For example, a provider administers 125 mg of oxaliplatin using three 50 mg single-dose vials. Because each 50 mg vial contains 100 billable units (each billable unit is 0.5 mg), you would report J9263 in box 24D of the CMS claim form and enter 250 in the “units” box. On the next line, you would list J9263 with “50” in the units box to describe the wasted drug amount (three 100-dose vials = 300 – 250 administered units = 50 wasted units). For those payers who require it, you would append modifier JW Drug amount discarded/not administered to the wasted units to identify (and be paid for) the units not administered to the patient.


G. John Verhovshek, MA, CPC, is director of editorial development/managing editor at AAPC.


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